Analyzing the Dividend Policy essay

ANALYZING THE DIVIDEND POLICY 8

Analyzingthe Dividend Policy

Analyzingthe Dividend Policy

Analyzingthe Dividend Policy for Hasbro, Inc.

Corporationscompensated the shareholders through the issuance of dividends. Theprimary objective of every organization is to maximize theshareholder’s wealth which is measured as per the dividends paidout (Arnold, 2011). The profit earned by the firm is utilized in twooptions, either by reinvesting in the future growth of the enterpriseor pay dividends to the owners or both. Most companies and moreespecially large firms generate huge cash earnings but have got fewor no investment opportunities. Such companies distribute theirearnings to the shareholders in the form of dividends. In the reallife, firms consider dividend payment as a commitment to the currentand potential investors (Franco et al., 2011). Different companieshave got different dividend policy this report aims to provide ananalysis of Hasbro, Inc. The past trend for the three years will beutilized to project the next year dividend.

Hasbro,Inc. dividend policy

HasbroInc. is one of the upcoming entities in the manufacturing industry ofentertainment facilities. The organization has managed to acquire andmaintain large market share due to its performance and customerrelation. This has also helped the firm to attract more investors dueto the perceived low risk. The analysis of the financial reports hasrevealed that the company the company is capable of generating highprofits not only to its shareholders but also to support its growthstrategies.

Dividenddeclarations at Hasbro Inc. are at the discretion of the Board ofDirectors, and it is based on the financial conditions and theearnings of the firm or even other factors that that Board ofDirectors perceives being appropriate. Hasbro Inc. is committed tocompensating the investors by returning cash to its shareholders inthe form of dividends and through share repurchase option. In thepast three years, the company has adopted several successful sharerepurchase authorizations. In addition to the repurchase option,Hasbro Inc. has been paying out quarterly dividends. The trend in thepast three years has also proved that the quarterly dividends for thecompany have undergone a sustainable growth. For instance, inFebruary 2014, the organization’s board increased the quarterlydividends rate to $0.43 per share. This marked an 8% growth in thedividends which was initial $0.4 per share in the previous quarter(Hasbro Inc. Annual reports, 2013).

Thetotal dividends paid by the company for the past three years were asshown in the table below.

Thisdata can also be represented in the graph as shown below

Piechart presentation

Thetotal dividends paid in the financial year 2012 included anadditional dividend payment that was declared by the board ofdirectors in December 2012 due to higher earnings generated in thisparticular year (Hasbro Inc. Annual reports, 2013).

Projectionof next year’s dividends

The total dividends issued in the past three years has been used toproject the expected next year’s dividends to be paid. Excelfunctions have been used in this forecasting. This projection is asshown below.

Dividendsper share projection

Thedividends per share is a most valuable tool for measuring thefinancial performance of the firm in the shareholders perspective.The dividends per share of Hasbro Inc. has experienced a steadygrowth in the past few years as indicated in this analysis. Thegrowth in the dividends per share has acted as the major incentive tothe shareholders of the organization. The table below shows a summaryof the dividends per share declared by the board of directors ofHasbro Inc.

Theabove analysis has proved that the company’s dividends per sharehas been continuously growing and this trend can be used to projectthe next year’s dividends as illustrated below

Comparisonof the Hasbro Inc. dividends policy to other firms in the sameindustry

Hasbrobeing one of the best-performing companies in this industry hasdominated the marker with high reported after-tax earnings. Thisearnings distributable to the shareholders has made it a success tothe company in fulfilling the primary goal of the firm which is tomaximize the shareholders’ wealth. The company has declared higherdividends per share than any other business in the same industry. Thedividend policy of Hasbro Inc. is also far much different from thatof other companies operating in the industry of entertainmentfacilities. This signifies a high competitive advantage for the firmand hence more attractive to the current and potential investors.

Conclusion

Withextra cash distributable to the shareholders, a firm is said to befinancially healthy. Dividends declared for the shareholders is avital tool for evaluating the performance of firm from the investor’spoint of view. The shareholders also need to assess the dividendspolicy of the company to evaluate the risk of their investment.

References

ArnoldG. (2011). Corporate Finance 4^thEdition. Britain: Pearson Education.

Franco,G. Wong, F. Zhou, Y. (2011). Adjustments in accounting with financialstatement valuation in 10k filing. Accounting Review.86 (5),1577-1604

HasbroInc. Annual reports (2013). Form 10K Download. Retrieved May 7, 2016,from http://files.shareholder.com/downloads/HAS/0x0x741385/E28E2FAF-2077-43D9-A860 63D242A90D00/HAS_2013_Annual_Report_FINAL.pdf